Introduction
Cost of Hydrogen in New Zealand.
What Determines the Cost of Hydrogen?
What Determines the Cost of Hydrogen?
Electricity is usually the dominant operating input.
A complete low-temperature electrolysis plant commonly needs roughly 50–60 kilowatt-hours of electricity for each kilogram of hydrogen, with additional energy potentially required for high-pressure compression or liquefaction. On that range, every NZ$0.01 per kilowatt-hour in electricity price contributes about NZ$0.50–$0.60 to the cost of a kilogram before capital recovery, water, maintenance, staffing, storage and delivery are added.
Cheap solar electricity does not automatically mean cheap hydrogen. An electrolyser used only during strong daylight hours produces fewer kilograms over which to recover its capital cost. Oversizing the solar array raises renewable-energy utilisation but adds generation cost; oversizing the electrolyser captures rare peaks but leaves expensive equipment idle. The economic optimum normally involves modelling hourly solar output, electricity prices, hydrogen demand, storage and the electrolyser’s part-load efficiency.
The lowest purchase price can therefore be misleading at every scale. Important whole-of-life questions include:
- Guaranteed energy use across the expected load range;
- Annual operating hours and availability;
- Stack life under the intended solar duty cycle;
- Stack replacement price and lead time;
- Local service capability and remote diagnostic support;
- Hydrogen delivery pressure and downstream compression cost;
- Water-treatment, cooling and purification requirements;
- Performance guarantees, warranties and financial strength of the supplier.
The International Energy Agency regards alkaline and PEM as commercially available, with AEM and solid oxide still maturing. It also cautions that electrolyser capital costs are hard to compare because quoted system boundaries differ. The US Department of Energy’s separate alkaline and PEM targets illustrate the same point: efficiency, lifetime, degradation and capital cost must be achieved together, including under dynamic operation.